ADM plans water wells to help Illinois ethanol production

DECATUR, ILLINOIS, March 22 (Reuters) - In a bid to churn out ethanol even in the worst of droughts, Archer Daniels Midland Co, the nation’s largest producer of corn-based biofuel, is preparing to break ground on two new water collector wells to aid a key Illinois corn-processing plant.

The 40-foot collector wells, to be dug on the company’s property in the Decatur area, will tap into a glacial aquifer located beneath Lake Decatur, ADM officials said Friday.

The corn wet mill plant - which also makes high fructose corn syrup, animal feed ingredients and other products - is one of the largest corn processing plants in the world. It is also one of ADM’s eight production facilities in the U.S. that produces ethanol.

Altogether, the company’s plants have the capacity to produce 1.72 million gallons of ethanol a year, according to data from the Renewable Fuels Association.

Ethanol production, which hit rocky times as corn prices rose amid last year’s devastating drought, is showing hints of a rebound as corn prices soften and biofuel companies source for sorghum and other grain alternatives.

But making ethanol, regardless of the grain used, in a water-intensive process. And the industry’s concerns over maintaining steady water supplies are growing, fueled by mounting demand for water access from drought-fearing cities and farmers.

News of ADM’s wells comes as the Decatur City Council is working on sweeping changes to its water system, which includes raising water rates by 120 percent over the next three years.

Such changes come in the wake of last year’s devastating drought that forced lawmakers to institute the most severe restrictions on water access in the city’s history.

Decatur City Council approved ADM’s wells plan earlier this month, as part of a broader agreement with ADM to try to ease the strain on the city’s overall water supply.

The new wells could pull as much as seven million gallons of water per day to the company’s North Water Treatment Plant, which typically draws more than 14 million gallons a day from Lake Decatur, according to city officials. The aquifer that the wells will draw from is not connected to the lake, according to the company.

ADM will pay Decatur for the water from these wells, though the city will allow ADM to access the water for free if severe drought once again plagues the region and the city enacts water restrictions, said City Manager Ryan McCrady.

The company, in turn, has agreed to pay Decatur $2.5 million to use in developing alternate water supplies, and potentially pay up to $1 million annually in connection to any dredging and lake improvement costs.

“It is important for ADM to have the equipment and policies in place so we can minimize our use of water from Lake Decatur during times of drought while continuing to operate our business at normal levels,” the company said in a statement.

As the worst drought in more than half a century crippled Midwestern crop fields last year, Decatur’s water restrictions shuttered car washes, hurt law services and had lawmakers scrambling to find ways to ease customers’ dependence on Lake Decatur as a primary water source.

The company is the city’s largest water customer, said McCrady. And while the city maintains other sources of supplemental water, Lake Decatur is the primary source of water for residents and area companies, McCrady said.

“We are looking at the overall water assets that we manage, from the lake, to the water supply, the water treatment and distribution systems, everything,” McCrady told Reuters.

The wells that ADM plans to dig “have been years in the making,” McCrady said. “This is something that has been studied for a long time, and is a smart move for both the company and the city.”

But environmental organizations have raised concerns over the allocation of additional water resources for ethanol production, particularly at a time when area lawmakers are trying to find alternative sources of water themselves.

“It makes little sense in the context of the greater public good for large corporate producers of the fuel to wrest more water from the public to produce their product,” said Don Carr, senior adviser for the Environmental Working Group.